The Role of China in Asia: Engine, Conduit, or Steamroller?

89 Pages Posted: 26 Sep 2007

See all articles by Jane Haltmaier

Jane Haltmaier

Board of Governors of the Federal Reserve System

Shaghil Ahmed

Board of Governors of the Federal Reserve System

Brahima Coulibaly

Board of Governors of the Federal Reserve System

Ross Knippenberg

Caterpillar, Inc.

Sylvain Leduc

Federal Reserve Banks - Federal Reserve Bank of San Francisco

Mario Marazzi

Board of Governors of the Federal Reserve System

Beth Anne Wilson

Board of Governors of the Federal Reserve System

Date Written: September 2007

Abstract

This paper assesses China's role in Asia as an independent engine of growth, as a conduit of demand from the industrial countries, and as a competitor for export markets. We provide both macroeconomic and microeconomic evidence. The macroeconomic analysis focuses on the impact of U.S. and Chinese demand on the output of the Asian economies by estimating growth comovements and VARs. The results suggest an increasing role of China as an independent source of growth. The microeconomic analysis decomposes trade into basic products, parts and components, and finished goods. We find a large role for parts and components trade consistent with China playing an important and increasing role as a conduit. We also estimate some regressions that show that China's increasing presence in export markets has had a negative effect on exports of some products for some other Asian economies, but not for other products, including those of the important electronic high-technology industry.

Keywords: China, engine, conduit, trade, integration, production fragmentation, displacement

JEL Classification: E32, F10, F40

Suggested Citation

Haltmaier, Jane and Ahmed, Shaghil and Coulibaly, Brahima and Knippenberg, Ross W. and Leduc, Sylvain and Marazzi, Mario and Wilson, Beth Anne, The Role of China in Asia: Engine, Conduit, or Steamroller? (September 2007). FRB International Finance Discussion Paper No. 904, Available at SSRN: https://ssrn.com/abstract=1017234 or http://dx.doi.org/10.2139/ssrn.1017234

Jane Haltmaier (Contact Author)

Board of Governors of the Federal Reserve System ( email )

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202-452-2374 (Phone)
202-736-5638 (Fax)

Shaghil Ahmed

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC
United States

Brahima Coulibaly

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Ross W. Knippenberg

Caterpillar, Inc. ( email )

United States

Sylvain Leduc

Federal Reserve Banks - Federal Reserve Bank of San Francisco ( email )

101 Market Street
San Francisco, CA 94105
United States

Mario Marazzi

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-6489 (Phone)
202-872-4926 (Fax)

Beth Anne Wilson

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

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